Equity

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1. In a general context: The principle of fairness in burden sharing and is a basis for understanding how the impacts and responses to climate change, including costs and benefits, are distributed in and by society in more or less equal ways.

It is often aligned with ideas of equality, fairness and justice and applied with respect to equity in the responsibility for, and distribution of, climate impacts and policies across society, generations, and gender, and in the sense of who participates and controls the processes of decision-making.

Distributive equity. Equity in the consequences, outcomes, costs and benefits of actions or policies. In the case of climate change or climate policies for different people, places and countries, including equity aspects of sharing burdens and benefits for mitigation and adaptation.

Gender equity. Ensuring equity in that women and men have the same rights, resources and opportunities. In the case of climate change gender equity recognizes that women are often more vulnerable to the impacts of climate change and may be disadvantaged in the process and outcomes of climate policy.

Inter-generational equity. Equity between generations that acknowledges that the effects of past and present emissions, vulnerabilities and policies impose costs and benefits for people in the future and of different age groups.

Procedural equity. Equity in the process of decision-making, including recognition and inclusiveness in participation, equal representation, bargaining power, voice and equitable access to knowledge and resources to participate. See also Equality, Ethics and Fairness.

2. In a business context: The amount of money that could be returned to a company’s shareholders if all its assets were liquidated and debts paid off. A company’s equity is a good indicator of its financial health. It is included on the balance sheet and is often used by potential investors to work out which companies they want to fund. Also known as the company’s value on paper, equity is calculated by subtracting the value of a business’s assets (such as buildings and cash) from its liabilities (such as salaries and tax).

The more equity a business has, the more valuable it is. Private equity. Any funding or stock that represents ownership of a company. Shareholders’ equity. The value of assets distributed among shareholders after they’ve been liquidated and debts have been paid. Ownership equity. How much the business is worth if it goes into liquidation and all of its debts are paid.

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Corporate Finance Institute® Equity